^ Failure to do so will attract a penalty which may be
up to 10% percent of the project cost.
^ Repeat offenders may land in jail.
The Union
Cabinet cleared a legislation to set up a long-pending (From 2007) real estate
regulator aiming to protect home buyers from unscrupulous developers and
builders.
The central
Cabinet on recently (June 4, 2013) approved Real Estate Regulatory Bill (RERB) that is expected to bring about a sea
change in the business practice of Indian real estate developers.
Implementation of the same will take time as it involves land & land is a state subject. If you are looking
to buy a property, here is how you will benefit when the Bill becomes a law:
A real estate
regulator - to be set up in every state
will ensure that private developers get all their projects registered
with it before sale and only after obtaining all necessary clearances.
It will be
mandatory for developers under the law to get every project registered with the
regulator before selling any immovable property. While the
commercial real estate has been kept out of purview of the proposed bill, it
will apply to residential buildings.
* Developers / promoters can launch
projects only after getting all relevant clearances.
* Developers / promoters can not offer any
pre-launch sales without the regulatory approvals. There is a provision for
mandatory public disclosure of all project details like credentials of
promoters, lay out plan, land status, carpet area & number of flats booked and status of statutory
approvals, addressing a major concern of buyers about incomplete or fraudulent
land acquisition and pending clearances.
* Authorities have 15 days to approve or
/ reject a project.
* Construction to begin only after the
developer's website has displayed all details of the project including receipt
of clearances.
* The buyers are entitled to full refund
with interest in case of delay in projects.
* Real Estate developers / promoters will
have to maintain a separate bank account for every project to ensure funds
raised for one project is not diverted. This provision was made to discourage
developers from diverting funds of a particular project to another that often
causes inordinate delay.
* It
will be mandatory to keep 70 % of the buyers’ funds in a separate bank account
to ensure timely completion of projects.
*
Developers / promoters can not take more than 10 % of the advance from
buyers without a written agreement.
* The
builders won't be allowed to publish misleading advertisements to lure buyers
while advertising the project. Builders will have to use photographs of actual
site for advertisements purpose.
* The property buyer friendly legislation will
clearly define carpet area and private developers will not be allowed to sell
houses or / flats on the basis of
ambiguous super area.
Real estate
agents will also be asked to register with the regulator. Agents, an important
link between the promoter and buyer, have been an unregulated lot till now.
Once they are registered, it will help in curbing money laundering.
* Failure to do
so will attract a penalty which may be up to 10% percent of the project cost.
* De-registration of the project and repeat
offenders may land in jail.
* For fast
tracking settlement of disputes, an adjudicating officer not below joint
secretary in the state will be appointed by the authority.
There will also
be Real Estate Appellate Tribunal that will hear appeals from orders, decisions
or directions of regulator and adjudicating officer.
Model
builder-buyer agreement
Under the bill,
there will be a model builder-buyer agreement which is expected to reduce
ambiguities in real estate transactions that not many buyers are familiar with.
* The Real
Estate (Regulation and Development) Bill 2013, which seeks to provide a uniform
regulatory environment to the sector, was opposed by private developers in
totality. But housing minister Mr. Ajay Maken stuck to it, saying the basic
tenet of the legislation is based on public disclosure that will infuse
transparency.
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